36 states ask Supreme Court to let them control their own shipping destinies

Carol Emert

Published
4:00 am PST, Thursday, March 18, 2004

The battle over direct-to-consumer wine shipping moved a step closer to the U.S. Supreme Court this month, when attorneys general from 36 states filed an amicus brief asking that the court affirm their right to ban consumer wine shipments.

California was among the 14 states that did not sign the petition, and Golden State officials are unlikely to ever back a wine-shipping ban (I'd like to see that recall campaign). But crackdowns in other wine-producing states --

notables such as Oregon, Washington and Virginia signed the amicus brief -- could make it impossible for Californians to order wine from those states.

Amicus briefs are filed by parties that have a vested interest in a lawsuit's outcome, but aren't directly involved in the litigation. As a strategic maneuver, this one is seen as a stunning display of opposition to interstate wine shipping, which is banned in 24 states and is the subject of lawsuits in federal courts around the country.

Several of the signatory states currently allow direct shipping -- so they are effectively asking the Supreme Court to overturn their own laws. While some of the brief's language is neutral, merely asking for clarity on how beverage-alcohol should be regulated, other passages show clear opposition to home wine delivery.

"The possibility that federal courts may eviscerate the states' ability to maintain their liquor control systems, as some circuit courts have already done, is of paramount concern to all the states," says the brief, filed March 5.

States fear that legal direct shipping would encourage sales-tax evasion and allow minors to buy alcohol over the Internet. They prefer that all liquor be sold through the wholesalers-retailer network, but that model restricts wine lovers to the limited offerings of their local shops.

Liquor wholesalers put a great deal of pressure on elected officials to keep beverage-alcohol transport in the wholesalers' hands, rather than sharing the business with home-deliverers like FedEx. Outside of California, wholesalers wield much more political clout than wineries and oenophiles.

While it's impossible to predict whether the Supreme Court will take the case, the support of 36 out of 50 attorneys general could tip the balance, legal experts say.

"When the Supreme Court sees that 36 attorneys general want some clarity regarding what their authority is (on interstate alcohol shipping), that is significant," says William Kinzler, a Santa Rosa attorney who represents wineries.

Craig Wolf, general counsel for the Wine & Spirits Wholesalers of America, says the brief "shows how broad the support is for the regulated system. The attorneys general see (pro-shipping litigation) as an attack on the regulatory system, which is dangerous and does nobody good."

Two direct-shipping cases, which came to opposite conclusions at the federal appeals court level, have been sent to the high court for consideration -- Michigan's Granholm v. Heald, which found that interstate direct shipping is protected by the Commerce Clause of the U.S. Constitution, and New York's Swedenburg v. Kelly, which found that the U.S. Constitution's 21st Amendment gives states the right to ban interstate shipments if they wish.

In addition, several other circuit courts have weighed in on the issue with varying results. In each case, the states allow their native wineries to ship to residents while forbidding mail-order deliveries from out-of-state wineries, triggering charges of discrimination under the Commerce Clause.

The justices could spend a year or more -- or less -- deciding whether they will take up the issue. Statistically, the chances are small -- the Supreme Court usually accepts fewer than 100 cases out of several thousand that petition each year.

Both Rehnquist, a conservative, and Stevens, a liberal, grew up during National Prohibition, which ended in 1933. Both have consistently ruled that states have absolute authority under the 21st Amendment to regulate beverage alcohol within their borders.

The voting records of the other justices are less clear, but give a hint as to how they might swing.

Justice Sandra Day O'Connor has a mixed record on 21st Amendment cases, but doesn't seem persuaded by discrimination arguments. She is considered likely to oppose legalized direct shipping, as is Justice Clarence Thomas, an avid states-rights advocate.

Pro-shipping forces believe Breyer could be the fifth vote against them. He is "a New Deal Democrat who believes in the power of the administrative state," says one attorney who didn't want to be named (lawyers involved in Supreme Court cases don't like to be seen as second-guessing the justices). "He's strongly inclined to see (regulation) as good."

If this hypothetical analysis proves correct, Michigan's wine-shipping ban will likely be re-instituted and ongoing litigation in other states may become moot, leaving shipping bans in place. (In New York, Gov. George Pataki is trying to legalize direct shipping and his attorney general's name is conspicuously absent from the amicus brief. In Arizona and Rhode Island, consumer lawsuits were dropped last week, in part because of anticipated Supreme Court action on Michigan.)

In the event of a Supreme Court loss, states with uncontested pro- shipping laws on their books would likely continue to allow their citizens to receive out-of-state wine shipments. But their legislatures could impose new shipping bans at any time.

Wholesalers would almost certainly try to regain the ground they've lost to direct shipping, which has become legal in 26 states. And it appears the wholesalers have powerful allies in the offices of 36 state attorneys general.